You just purchased 100 shares of stock at a cost of $55 per share. To hedge...
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You just purchased 100 shares of stock at a cost of $55 per share. To hedge the risk that the stock might decline in value, you purchased 60 six-month European put options. Each option has an exercise price of $45 and costs $5. How can I develop a worksheet that indicates the six-month percentage return on my portfolio for a variety of possible future prices? Note: A European put option allows you to sell at a given time in the future (in this case, six months) a share of stock for the exercise price (in this case, $45). The option has no value if the stock's price in six months is $45 or higher. A 1 2 Nputs 3 Nshares ➤ 4 exprice $ 5 pricenow $ $ final stock 10 price 11 $ 20.00 12 $ 25.00 13 $30.00 14 $35.00 15 $40.00 16 $45.00 B 6 putcost 7 startvalue $5,500.00 8 Startvalue $5,800.00 9 17 50.00 18 $55.00 19 $60.00 20 $65.00 21 22 23 60 100 45.00 55.00 5.00 final put value C final share value 4 D E percentage percentage return return hedged unhedged LL F DE G You just purchased 100 shares of stock at a cost of $55 per share. To hedge the risk that the stock might decline in value, you purchased 60 six-month European put options. Each option has an exercise price of $45 and costs $5. How can I develop a worksheet that indicates the six-month percentage return on my portfolio for a variety of possible future prices? Note: A European put option allows you to sell at a given time in the future (in this case, six months) a share of stock for the exercise price (in this case, $45). The option has no value if the stock's price in six months is $45 or higher. A 1 2 Nputs 3 Nshares ➤ 4 exprice $ 5 pricenow $ $ final stock 10 price 11 $ 20.00 12 $ 25.00 13 $30.00 14 $35.00 15 $40.00 16 $45.00 B 6 putcost 7 startvalue $5,500.00 8 Startvalue $5,800.00 9 17 50.00 18 $55.00 19 $60.00 20 $65.00 21 22 23 60 100 45.00 55.00 5.00 final put value C final share value 4 D E percentage percentage return return hedged unhedged LL F DE G
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Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams
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